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Of Special Interest ...examining a significantly timely topic

Aug 07 2018

Too Many Clocks

  • Aug 7, 2018

Whatever one’s philosophical leaning, the practice of adjusting earnings has left investors with too many watches to consult. We look deeper into the topic of adjusted earnings to gauge the slippage between commonly-referenced earnings clocks.

Jul 06 2018

Try This On For Size

  • Jul 6, 2018

Today’s market is barbelled regarding company size, with the mega-cap Tech stocks and the S&P 600 Small Cap index both outperforming the middle of the S&P 500.

Jun 07 2018

Cycles And Taxes And GICS, Oh My!

  • Jun 7, 2018

Analyzing quarterly financial results and developing insights about upcoming periods is always difficult, but the first quarter of 2018 was unusually complicated.

May 04 2018

The Yin And Yang Of Utilities

  • May 4, 2018

Are Utilities defensives, or are they interest rate plays, or both? We believe the driving influence fluctuates based on market conditions, specifically fear, and the desire for protection in down markets.

Apr 05 2018

Defensive Equity Styles: The Sultan Of Swat And The Splendid Splinter

  • Apr 5, 2018

After performing amazingly well in the record-setting bull market run since 2009, defensive equities are once again drawing attention for their traditional role as hedges against a continuation of recent market declines.

Mar 07 2018

Factor Mapping: The Final Piece Of The Puzzle

  • Mar 7, 2018

This months-long research effort culminates with this commentary as we lay out our thoughts on factor rotation and introduce The Leuthold Group’s recently launched Factor Tilt strategy.

Feb 06 2018

Leuthold Thematic Baskets 2.0

  • Feb 6, 2018

After a hiatus of several years, we are re-introducing one of our favorite analytical tools. A thematic basket is a custom-designed set of assets which are exposed to, and will react similarly to, a common theme. Our first new thematic basket is “Capital Spending Beneficiaries.”

Feb 06 2018

Capital Spending Beneficiaries

  • Feb 6, 2018

Several key drivers of capital expenditures look particularly favorable right now, and this research note focuses on the potential for improving business conditions to produce an upswing in capex.

Jan 18 2018

Muster Drill: To The Value Lifeboats

  • Jan 18, 2018

While we’re not calling for an imminent market top, we are keeping a diligent watch from the crow’s nest for signs of a coming market correction.

Jan 06 2018

Coming Attractions

  • Jan 6, 2018

With an abundance of year-end updates in this edition of Perception for the Professional, we plan to release the content for this “Of Special Interest” section separately in mid-January.

Dec 07 2017

The Many Faces Of Mo

  • Dec 7, 2017

Momentum is one of the most widely accepted alpha-generating factors, used by quantitative and fundamental managers alike. Its biggest drawback, however, is high turnover. Herein we explore momentum from the perspective of sector weights.

Nov 07 2017

The Case Of The Disappearing Value Premium

  • Nov 7, 2017

Market history teaches us that investors behave differently in groups than they do as individuals.

Oct 05 2017

The Latest Sure Thing

  • Oct 5, 2017

A fascinating aspect of long-running bull markets is the emergence of money-spinning strategies that come to be seen as “sure things.”

Sep 08 2017

A Harbor In The Tempest

  • Sep 8, 2017

Our Major Trend Index (MTI) recently fell from “positive” toward stocks to a “neutral” reading, leading us to trim bullish equity positions in our tactical portfolios.

Aug 05 2017

Actively Bearish, Passively Bullish?

  • Aug 5, 2017

Relative performance of active and passive mutual funds is one of the leading story lines in our industry, with passive’s recent advantage leading some to argue that it will be the dominant style forevermore. We disagree, and believe that the active/passive relationship has been, and always will be, cyclical.

Jul 08 2017

Beatlemania And Narrow Markets

  • Jul 8, 2017

In April 1964, the Beatles simultaneously held the top-five spots on the Billboard Hot 100, a unique feat in the history of modern music.

Jun 07 2017

Dynamic Factor Investing: A Study In Value

  • Jun 7, 2017

Investment factors experience performance cycles just like every other asset and index. The Value factor is robust across definitions, as all eight versions produced positive excess returns under long/short and long-only methodologies.

May 05 2017

Sector Profit Margins: A Long-Term Review

  • May 5, 2017

Despite real GDP growth of just 1.6% in 2016, the median S&P 500 company earned a net profit margin of 9.7%, only 40 basis points below the record high established in 2014.

Apr 06 2017

Stock Picking In A Season Of Animal Spirits

  • Apr 6, 2017

We examine past capex spending patterns and identify industries with sales growth rates that have historically been the most responsive to capex cycles.

Mar 06 2017

Grappling With A Strong U.S. Dollar Outlook

  • Mar 6, 2017

Profitable investing overseas requires not one, but two, successful decisions: 1) select an outperforming asset class; and, 2) be in a currency that provides a favorable foreign exchange impact.

Feb 07 2017

Factor Investing And The Importance Of Market Cycles

  • Feb 7, 2017

While factors do offer excess return they are by no means winners in all seasons. Our findings show that factor returns are cyclical, volatile, and unstable over time.

Jan 18 2017

An Earnings Bottom...What's Next?

  • Jan 18, 2017

It seems like it’s been ages since investors have been able to get excited about earnings growth, although our October 21st “Chart of the Week” showed that the S&P 500’s current earnings slump has been unremarkable in both depth and duration.

 

Jan 06 2017

Trends In Corporate Debt And Coverage Ratios

  • Jan 6, 2017

Long-term debt (LTD) issued by S&P 500 companies has risen 75% since 2010, and the resulting deterioration in leverage ratios has been all too evident.

Dec 07 2016

Quantitative Factor Performance: Year In Review

  • Dec 7, 2016

Factor performance during 2016 is the reverse of that of 2014-2015. Quants and smart beta funds focusing solely on Value have enjoyed the year, while multi-factor approaches have struggled. Value has been the only factor that has provided positive performance this year.

Nov 03 2016

An Initial Look At Smart Beta And Factor Investing

  • Nov 3, 2016

Also known as smart beta or strategic beta, factor investing has become the hottest portfolio management trend in the last five years. The smart beta space exceeds $600 billion in assets under management.

Oct 06 2016

Dependence On Initial Conditions, Valuations And Forward Returns

  • Oct 6, 2016

A client inquiry led us to take a fresh look at the relationship between current valuations and subsequent stock market returns, which is a regular feature in our Benchmarks publication.

Sep 08 2016

Same Ponds, Different Fish?

  • Sep 8, 2016

The impact of atypically-high current valuations has become a challenge for style-box investing. High quality, mature dividend payers have habitually resided in the Value and Blend boxes, but investors have bid up those valuations as they look for alternatives to low bond yields.

Aug 05 2016

REITs: “We Are #11” - A Fresh Look At The Newest GICS Sector

  • Aug 5, 2016

On August 31st, Real Estate will become the newest GICS sector and the first Level 1 addition since the framework was unveiled in 1999—REITs had been classified as an industry under the Financials sector.

Jul 07 2016

Valuation Metrics: Numerators & Denominators

  • Jul 7, 2016

Different measures of value may tell different stories. Using various metrics, we examine the valuation of Large Caps, Small Caps and equity sectors.

Jun 07 2016

Time For Materials?

  • Jun 7, 2016

The Leuthold Materials sector jumped five spots to #3 in the June Group Selection (GS) rankings, its highest ranking in eight years and the first reading outside of the bottom four in almost four years.

May 06 2016

Profit Margins At The Sector Level

  • May 6, 2016

S&P 500 profit margins mask the disparate trends taking place on a sectoral level. We dissect those trends with the ten major sectors grouped by five broad themes: Cyclicals, Commodities, Defensives, Interest Sensitives, and Tech/Telecom.

Apr 07 2016

Implications Of Low Growth, Low Inflation, Low Rates

  • Apr 7, 2016

The current environment will likely persist longer than most expect which will put further downward pressure on profit margins. As margins come under pressure, companies increase leverage to prop up ROE. However, the market wants higher duration, not higher leverage.

Mar 08 2016

Big U.S. Banks: We Have A Motion, Is There A Second?

  • Mar 8, 2016

YTD the S&P 500 has fallen 2% while the S&P 500 Banking industry group is down over 12%—a shortfall that has the attention of value investors and contrarians seeking a chance to buy high-quality banking franchises at fire-sale prices.

Feb 05 2016

The Bullish Case: A Mental Exercise

  • Feb 5, 2016

We’ve been correctly positioned near our tactical portfolios’ equity minimums, yet we’re oddly compelled to use this month’s “Of Special Interest” section as a very public second-guessing of that move.

Jan 08 2016

Knee Deep In An Earnings Recession

  • Jan 8, 2016

It’s a scary thought but what does 2015 have in common with the infamous years of 2001, 2008, and 2009? An earnings recession for the S&P 500 — and the 2015 vintage certainly has some unique traits.

Dec 08 2015

Quantitative Factor Performance: What Is Working?

  • Dec 8, 2015

For the third consecutive year (thus far), quantitative factors worked best within the Materials sector. Energy also saw success as the decline in oil hurt the same stocks as in 2014. Factors were least effective in Health Care and Telecom.

Nov 06 2015

Surveying The Commodity Carnage

  • Nov 6, 2015

The wreckage is beginning to look interesting and—with our cautious stance on the stock market—it would be fun to be bullish about something. Both our GS Scores and intuition suggest it’s still too early.

Oct 07 2015

A Good Year To Play The Bounce?

  • Oct 7, 2015

Our research shows that the best years to “Play The Bounce” are generally ones in which the stock market is heading down into the fourth quarter. We won’t rule out an allocation to the Bounce strategy in the weeks ahead.

Sep 08 2015

Oil Price “Crashes” In Historical Perspective

  • Sep 8, 2015

In view of the last year’s steep decline in oil prices, Energy has been a frequent headline topic.

Aug 07 2015

Value, Momentum, And The Stock Market Cycle

  • Aug 7, 2015

Conventional measures of market action, like breadth and industry leadership, point to the formation of a bull market top. Divergences abound.